British Airways, Iberia, Agree to Merge

Big news from across the Pond: British Airways and Iberia agreed to a merger yesterday. The resulting airline should become Europe’s largest (surpassing Air France-KLM) as well as one of the largest airline groups in the world. Both British Airways and Iberia are struggling mightily, and the move is expected to help each company survive the recession.

The merger is expected to be signed in early 2010, with shareholder approval to come later. The deal will also need regulatory approval.

Both carriers will enjoy a massive broadening of reach, what with British Airways’ dominance in the transatlantic and Pacific markets, and Iberia’s connections to Latin America. British Airways will also receive a boost at Madrid, Iberia’s home airport, which provides an alternative for travelers who usually fly through British Airways’ congested hub in Heathrow. The combined airline will also look to cut redundant costs.

Of course, that’s if all goes well.

In the meantime, you might be wondering what this means for travelers in the states, and the short answer is: Not a whole lot right now. British Airways has more reach and presence here in the U.S., and in the near term there shouldn’t be much of a change with regards to service. Eventually British Airways customers will have the benefit of expanded routes to Latin America and the option of connecting through Madrid’s beautiful and less congested airport.

Both airlines are members of the oneworld alliance, so frequent flyers shouldn’t see any drastic changes either.

Readers, do you think these megamergers are a good thing? On one hand, it helps carriers survive and expand their service, but could also lead to massive consolidation, with a handful of airlines commanding huge a percentage of the market. Leave a comment below with your thoughts.